Home financing: Boy, there's more to life than AA miles!

This situation came out the way I thought it might, but the degree of difference was much larger than I envisioned.

I'm in the early stages of looking at $30K of home improvement, and still at the point of deciding whether the "lost opportunity cost" of taking the money out of cash (meaning less interest and dividends coming in) exceeds the cost of getting a home-equity loan.

So I "Googled" "AAdvantage miles home equity loan" and came up with two separate URLs, one saying Wells Fargo offered 1,000 miles per $10K funded, and one saying that same bank was giving 3,500 miles per $10K. So I decided to call the "800" number for more information, and an interest rate quote.

Background to this is I had stopped at my local Wichita bank this morning and gotten their quote. Had to wait two minutes to see a banker, then got quick, concise answers: current rate on a fixed $30,000,10-year home-eq loan (not HELOC) 4.5% with a $350 loan origination fee.

Then I came home and called Wells Fargo. Had to talk to four different employees and call two different toll-free numbers, and was placed on hold three times, and once got a "my computer keeps freezing up, I apologize."

Was told the correct number of miles was 1,000 per $10K, which I had feared.

But far worse was the rate quote on the same product the local bank had quoted me: rather than the local 4.5% A.P.R., with Wells Fargo it was 7.365 % (which mysteriously went up to 7.372 % during the course of our phone conversation, and he couldn't explain the difference). And when I got such a high-rate I stopped even writing down what the closing costs were. Plus having to listen through all sorts of legal mumbo-jumbo disclosures which the local banker an hour earlier had distilled down to simple, harmless English.

No way in God's Green Earth am I going to pay a rate more than half-again higher and go through that sort of phone-maze bureaucracy to get 3,000 miles. But hey, I tried!

No way in God's Green Earth am I going to pay a rate more than half-again higher and go through that sort of phone-maze bureaucracy to get 3,000 miles. But hey, I tried!

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Why not? That is un-American. Wells Fargo clearly loves you, enough that if you borrowed only $250K, you'd earn enough for a free domestic ticket worth about $300 (well, plus you'd owe taxes on it) and what is not to love about that, even at 10% interest?

Given that all the banks are taxing bonuses that they are giving away, I'm completely staying away from them. You never know if they will claim that you received a ridiculously valuable bonus like 3 cpm on that bonus and at that point, it's already too late because you have that 1099 sitting in your mailbox.

Wells Fargo AA miles program is a nightmare. Long story short: we stared paperwork for our addition in January 2009, by July it wasn't completed - they had everything they needed from us and the contractor since day 1, so we switched to BoA and skipped the 49k miles.

Essentially all of the "points for mortgages" schemes I've come across over the past 15 years have been bad deals. Perhaps the one way I've seen to get points on buying a home was to use certain real estate agents that participate in AAdvantage.

Even these programs only were efficient when you were buying. I had looked at them when selling a place, and the local participating agents wouldn't negotiate commission. The agent I selected for that sale did, and it saved me a bundle. (When you buy, your agent gets a cut of the selling agent's commission, so isn't in a position to charge more.)

Essentially all of the "points for mortgages" schemes I've come across over the past 15 years have been bad deals. Perhaps the one way I've seen to get points on buying a home was to use certain real estate agents that participate in AAdvantage.

Even these programs only were efficient when you were buying. I had looked at them when selling a place, and the local participating agents wouldn't negotiate commission. The agent I selected for that sale did, and it saved me a bundle. (When you buy, your agent gets a cut of the selling agent's commission, so isn't in a position to charge more.)

Ymmv.

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The mileage/high-rate ripoff angle was only one of two frustrations today - though I probably emphasized it in my post because this is a forum for frequent flyers. The other annoyance was the impersonal, bureaucratic and just plain potentially expensive way the megabank (said to be one of America's healthier ones) was acting, compared to the local one. (I checked with a second local bank later. Equally efficient, courteous and straight like the first, but higher rates though not as high as Wells.) I really don't think the dimwit computer-befuddled guy with the high rates at the end of today's Wells saga even knew I was interested in miles. My mention of that to a whole different person was removed by one transfer and a referral to a different toll-free number. So the rates weren't high because of my interest in AAdvantage -- a $30,000 equity loan just wasn't apparently the type of fish they had much interest in frying.

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